Agency Risk Management & Internal Controls Standards

Commonwealth Accounting Policies and Procedures (CAPP) Manual

The CAPP Manual documents the policies and procedures associated with teh Commonwealth's centralized accounting and financial systems. Topic No. 10305 Internal Control provides guidelines to assist state agencies and institutions in implementing internal control programs under the authority of Code of Virginia §§ 2.2-800 and 2.2-803 and identifies the Agency Risk Management and Internal Controls Standards (ARMICS) as the definitive source for internal control in the Commonwealth.

Does UVA have to follow the CAPP Manual?

The Restructured Higher Education and Administrative Operations Act (Restructuring Act) granted public colleges and universities greater financial and administrative autonomy in exchage for their commitment to meet specific statewide goals. However, in many important ways the University remains the same, including that it remains a state agency and employees remain state employees. As a state agency, UVA has financial reporting obligations to the state and must adhere to common accounting policies and procedures in many areas, including internal controls. The CAPP Manual provides a standardized approach to fiscal and accounting matters within the authority of the State Comptroller.

What are UVA's obligations under the CAPP Manual?

Per the CAPP Manual, each Agency Head (e.g., UVA President) is responsible for having agency management document the agency's assessment of internal control to include:

Strengths, weaknesses, and risks over the recording of financial transactions in the General Ledger;

Compliance with the agency's financial reporting requirements;

Compliance with laws and regulations; and,

Stewardship over the Commonwealth's assets.

The assessment of internal controls and documentation must be conducted in accordance with ARMICS.

Agency Risk Management and Internal Controls Standards

ARMICS is an initiative of the Department of Accounts (DOA) for all state agencies within the Commonwealth of Virginia. Simply stated, the primary purpose of ARMICS is to ensure fiscal accountability and safeguard the Commonwealth’s assets. This purpose is achieved through the implementation of an effective system of internal controls and "best-practices" that directly support the Commonwealth’s vision and long-term objectives.

What is an effective system of internal control?

As defined in ARMICS, an effective system of internal control:

provides accountability for meeting program objectives;

promotes operational efficiency;

improves the reliability of financial statements;

strengthens compliance with laws and regulations; and,

reduces the risk of financial or other asset losses due to fraud, waste, or abuse.

What is the purpose of ARMICS?

The goal of ARMICS is to provide reasonable assurance of the integrity of all fiscal processes related to:

Submission of transactions to the Commonwealth's general ledger

Submission of deliverables required by financial statement directives

Compliance with laws and regulations

Stewardship over and safeguarding the Commonwealth's assets

Why is compliance with ARMICS important to the Commonwealth?

The Commonwealth of Virginia has designed ARMICS to achieve the following objectives:

Strategic: support for "being recognized as the best-managed state in the nation" through internal control best practice

Operational: effective and efficient use of fiscal resources and other assets

Reporting: integrity and reliability of financial reporting

Compliance: compliance with applicable laws and regulations

Stewardship: protection and conservation of assets

To meet these standards, an agency (e.g., UVA) must demonstrate that it has five internal control components established and fully functioning:

Control Environment,

Risk Assessment,

Control Activities,

Information and Communication, and

Monitoring.

Support

Please email any questions regarding the University's ARMICS implementation to armics@virginia.edu. You may also contact an FOC team member directly, see our Contacts page for individual bios and contact information.